Talisman in Sudan: The legacy of Cecil Rhodes - The Globe & Mail, Nov.29
The empire builder's ruthless tactics from a century ago may seem familiar to observers of Talisman's trials in Sudan
MADELAINE DROHAN
Monday, November 29
IN OTTAWA -- Cecil Rhodes set the pattern. His British South Africa
Co. used dynamite to clear Africans from land it wanted for gold mining.
It played one chief against another. Company directors kept
shareholders quiescent by playing down reports of widespread rebellion
and talking up the riches to come.
A hundred years later, those watching the saga of Talisman Energy Inc.
in Sudan may well wonder: Has anything changed?
The Calgary oil company is accused of being complicit in human-rights
abuses perpetrated by the Islamic government of Sudan against
Christians and animists who live in the south. At stake are vast oil riches
that could bring the primitive country into the modern age.
Talisman's chief executive officer, Jim Buckee, adamantly denies any
wrongdoing, and Canadian special envoy John Harker expects to set off
this week to see whether the accusations are true.
What he will undoubtedly discover is that many of the tactics employed
by Rhodes in his quest for an empire are still in use in the oil fields of
southern Sudan.
Talisman is not alone, although it is receiving the lion's share of bad
publicity. There are hundreds of foreign companies operating in war-torn
Africa and most will be taking a page from the book written by Rhodes
and his contemporaries.
Africa's vast resources make the continent a tempting prospect: It has 54
per cent of the world's gold reserves, 14 per cent of copper production
and dominance in the diamond industry, thanks to production and the
marketing strength of De Beers Consolidated Mines. Its oil reserves are
only beginning to be tapped.
The problem is that many of these resources are in countries riven by
internal conflict. For example, Sudan's long-running civil war between the
Muslim north and the black African south started with independence in
1955 and has continued, with periodic lulls, ever since.
Often the warring parties are battling for control of the resource wealth
or using it to continue the fight. Diamonds, which are both portable and
untraceable, have kept Angolan rebels in food and arms for years.
No foreign company working in a war zone can expect to conduct
business as usual. They face a host of problems, not the least of which is
the safety of key workers and investment.
But there are also questions about ownership of the resource in times of
war and who gets to share in the profits.
Talisman is having to deal with all of these issues, plus the overriding
question of the ethics of its involvement.
The Canadian company is part of a four-member consortium producing
oil in southern Sudan and operating a 1,600-kilometre pipeline from the
oil fields to the Red Sea coast. There are some startling similarities in the
way companies have acted over the years in confronting the same
problems that Talisman now faces.
When Rhodes went looking for gold in what became Rhodesia (now
Zimbabwe and Zambia), he initially struck a deal with the strongest of the
leaders in the area, an Ndebele chieftain called Lobengula. This gave his
company unopposed access to the land occupied by the Shona, who
had been subjugated by the Ndebele.
Talisman made its deal with the Khartoum government, a military
regime that seized power a decade ago and has been in constant warfare
with elements in southern Sudan ever since. The oil fields lay almost
entirely in south Sudan and are claimed by both north and south.
In both cases, the company involved made a deal with the strongest
party in a dispute, gambling that it would eventually emerge the victor
and title would be secure.
This doesn't always work, however.
In the battle for control of what is now called the Democratic Republic of
Congo in the early 1990s, foreign companies signed deals with the
government of Mobutu Seze Seko only to have some of them overturned
when Laurent Kabila took charge.
Likewise, diamond concessions in Sierra Leone were thrown in doubt in
the coups and countercoups that plagued the country earlier this decade.
The concessions were eventually nullified as a condition of this year's
peace deal.
Picking sides
Some companies, such as the Belgian company Union MiniŠre in what
was known as Katanga and Lonrho PLC in Mozambique, actively
backed one side in an internal conflict.
Union MiniŠre did this in the Katanga war for secession from the Congo
in the 1960s by diverting the taxes from its rich copper operations to the
regional Katanga government from the central government. It paid for
this in the end when Mr. Mobutu won the internal war and then
nationalized the company's holdings.
In these cases, corporate backing helped to prolong a conflict in which
thousands of civilians were killed.
Tiny Rowland of Lonrho, described as a first-class meddler in African
politics, openly backed the government of Mozambique in its civil war in
the 1980s.
But Mr. Rowland added a twist to the usual corporate conduct by also
backing the Renamo rebels. He paid them to not attack the Lonrho
pipeline that ran from the port of Beira to the border with Zimbabwe.
To add a further complication, he also financed peace negotiations.
Jean Raymond Boulle, the major shareholder in American Mineral
Fields, lent his private jet to Laurent Kabila when the rebel chief was
fighting to depose Mr. Mobutu. Mr. Kabila won, but his government
later repudiated the deal it had signed with American Mineral Fields to
develop rich copper deposits in Kolwezi.
Talisman has been accused of picking sides in the Sudanese conflict by
going into partnership with the Khartoum government. The Sudanese
state oil company holds 5 per cent of the consortium of which Talisman
holds 25 per cent. The other two members are the Chinese and
Malaysian state oil companies.
In Rhodes's time, empire builders claimed to be helping Africans by
exposing them to the three C's -- commerce, Christianity and civilization.
Mr. Buckee defends the company's presence in Sudan by saying the
country needs investment. In a letter sent to shareholders last week, he
said the consortium has built roads, drilled wells, paid for vaccinations
and financed a hospital in the oil fields.
"Sudan is not the most perfect place," he said recently. "But geez, look at
Angola. There is lots of other nasty places. Why us? Why Sudan?"
Use of armed force
Throughout history most companies trying to operate amid conflict have
relied on armed force. Rhodes recruited British army officers looking for
adventure and supplemented them with local recruits. King Leopold of
Belgium used officers from his own army while setting up a rubber
empire a century ago in what is now the Democratic Republic of Congo.
The oil companies working the offshore fields of Angola in the early
1990s depended on Angolan army troops bolstered by the
now-disbanded mercenary group from South Africa known as Executive
Outcomes. EO spawned smaller companies such as Lifeguard and
Saracen that continue to provide security for mines and oil installations
across Africa.
The provision of private security has become a growth industry following
the end of the Cold War. Companies such as Military Professional
Resources Inc. and DynCorp in the United States and Defence Systems
Ltd. and Gurkha Security Guards in Britain offer services to companies
ranging from advice on how to protect installations to armed security
personnel.
Talisman's security comes from the Sudanese Army, supplemented by
local militias and the Public Defence Force, which includes university
students conscripted to fulfill their military obligations. The local militias
have shifting loyalties, with leaders sometimes siding with the Khartoum
government and sometimes siding with the southern rebels.
It is the Sudanese government that is accused of forcibly clearing
southerners out of the oil zone by bombing settlements, encouraging rival
militias to attack and preventing aid agencies from dropping food in key
areas.
The oil companies operating in Nigeria, including the giant multinational
Shell, had a similar arrangement with the Nigerian army. The oil
companies depended on the state forces to defend their installations
against attack by local rebels.
All of these arrangements carry risks for the company involved.
Talisman, like the companies operating in Nigeria, finds itself identified
with the human- rights abuses perpetrated by the military regime.
Mr. Buckee has said repeatedly he is not responsible for the Khartoum
government's actions. Shell, like Talisman, has protested over the years
that it does not interfere in local politics.
But opponents point out that the oil revenues made possible by Western
investment help sustain such regimes.
News management
There is a comparison to be made in how companies attempt to manage
the news. Reports about rebellion in what became Rhodesia filtered out
to the wider world, as did stories about atrocities in Congo.
The reaction of the British South Africa Co. and the Belgian rubber
companies in Congo was to play down such reports as exaggerations.
Both Rhodes and King Leopold had journalists in their pockets.
Concerned about what he considers partisan reporting, Mr. Buckee
recently hired international public-relations firm Hill and Knowlton Inc.
"We need to get somebody to start writing letters and things like that
because we have better things to do."
Belgians did not believe reports of the savagery in Congo until academic
Felicien Cattier was dispatched to write what King Leopold hoped
would be a whitewash report. Instead, what he wrote persuaded the
public otherwise.
In a way, Mr. Harker, the Canadian envoy, is a modern-day Mr.
Cattier, sent to report to Canadians what he sees.
A favourite tactic of companies facing bad publicity is to arrange tours
for investment analysts, where every step is carefully scripted and the
project is shown in its best light. Analysts came back from a recent
Talisman tour saying nothing but good things. "I'm not here to be
political," one wrote. "I'm here to make money for my unit holders."
There are undoubtedly companies that conduct themselves honourably.
Watchdogs are reluctant to nominate good corporate citizens for fear
their track records cannot easily be verified.
But it is clear that human rights and community development are now on
the resource industry's agenda. Canadian Occidental Petroleum Ltd.
helped craft a voluntary code of ethics for Canadian companies to follow
when working abroad. Mining company Placer Dome now emphasizes
community involvement in its projects.
These are important steps, but many more are needed before the
resource extraction model pioneered by Cecil Rhodes is declared
obsolete.
Madelaine Drohan is a Globe and Mail columnist based in Ottawa.
She examined Talisman's Sudanese situation at length in
September's Report on Business Magazine. |
